Page 331 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Customer Relationship Management

Notes 12.2.12 Costs of Acquiring Public Information

Many sorts of public information have been available at some transactions cost: in order to find
housing assessments, it has typically been necessary to travel to a city or county office and look
up the information. Now that increasing numbers of consumers are computerized it is possible
to acquire this information much more inexpensively. Information that was previously deemed
useful to be publicly available under the old transactions technology, may now be deemed to be
too available.
This, it seems to me, has a reasonably simple solution. The information could be made available
in digital form, but at a price that reflected the transactions costs implicit in acquiring the
information using the old technology. The price paid for the information could then be used to
defray the cost of making it publicly available.
For example, suppose that, on average, it took a citizen one hour to go to the country records
department, look up a tax assessment and photocopy the relevant material. Then a reasonable
charge for accessing this information online might be on the order of $ 25 plus 20 cents or so per
assessment requested.
This sort of charging schedule essentially restores the status quo, provides some funds for local
government, and offers an additional choice to individuals. People who didn’t want to pay the
$ 25 could make the trip to the county records office and access the same information there “for
free” (i.e., paying no monetary cost.)

Assignment of Rights
We have argued that an appropriate way to deal with privacy issues is to determine a baseline
assignment of rights, but allow individuals to trade those rights if they desire to do so. If there
are no transactions costs in trading or negotiation, the initial assignment of privacy rights is
arbitrary from the viewpoint of economic efficiency.
If there are significant transactions costs to making contracts such as these, the standard Coasian
arguments suggest that an efficient allocation of rights would be the one in which the transactions
and negotiation costs are minimized. In this case, the appropriate comparison involves the
transactions cost to the individual to having his or her name removed from the list to the cost to
the mailing list owner of soliciting permission from individuals to add them to the list.

When phrased in this way, it appears that the current practice of adding someone’s name to a list
unless they specifically request removal probably minimizes transactions costs. However, the
rapid advances in information and communications technology may change this conclusion.
The development of social institutions such as Laudon’s market would also have a significant
impact on transactions costs.
Self Assessment

State whether the following statements are true or false:
6. Data protection statutes do not bar the collection of data.
7. Primarily Europe, Asia and America countries have not enacted privacy legislations.
8. In 1989, the OECD drafted a first set of guidelines regarding privacy

9. Full form of TDF is transborder data flows.
10. Eavesdropping is efficient because it forces the participants in a communication to disguise
the content of their transmission

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